What defines a non-warrantable condo?

A non-warrantable condo is characterized by specific conditions that prevent it from being eligible for government-backed financing like FHA loans. The correct choice identifies a condo that does not have FHA approval, indicating that it does not meet certain requirements set by the Federal Housing Administration. Condominiums that are converting from rentals often face challenges in obtaining such approval, as they may not yet meet the necessary criteria, such as owner-occupancy ratios or financial stability.

In general, FHA compliant condos are those that satisfy all regulatory requirements, making them warrantable and eligible for FHA financing. Conditions such as having a maximum percentage of investment owners, typically 25%, indicate that the condo is more likely to be considered warrantable, as this reflects a balance between owner-occupants and investors. A condo owned by a single entity may also be seen as a risk factor, but it generally connects more to financing concerns rather than automatically defining it as non-warrantable.